BIHL ready to absorb Covid-19 shocks

Blue chip local insurance company, Botswana Insurance Holdings Limited (BIHL) has managed to escape the ramifications of the subdued economic activity that was rampant in the year 2019.

The economic environment in 2019 was best characterised by uncertainty and volatility for certain sectors but the group beat the odds to post exceptional performances.

In the midst of both domestic and external volatile markets, BIHL Group – according to its CEO Catherine Lesetedi in 2019 annual report – returned laudable profits despite the challenging conditions by posting 7% increase in core earnings in 2019 worth P142 million.

The Group’s Operating Profit has remained flat at P376 million though a massive 18% progress was realised in Profit Attributable to Equity Shareholders valued at P437 million.

“We were also pleased to see an impressive 11% increase in Net Insurance Premium Income to P2.6 billion. In addition, despite the ever increasing competition in local insurance sector, our position as country’s leading financial provider was assured and confirmed by an 8% rise in the Value of New Business to P158 million,” underscored Lesetedi in the BIHL Group CEO report.

Furthermore, BIHL also experienced an 8% decrease in its fee revenues to P98 million due to pressure on fees but Assets Under Management (AUM) grew up by 6% to record P 29.2 billion.

Lesetedi noted that the results demonstrate the unrivalled combined strength across the Group and its Associates and most vitally the triumphs of the strategy over the years.

“This includes our diversification efforts as we moved towards becoming a truly broad-based financial services organisation. We are pleased with the contribution to the Group’s Operating Profits from our Associates that stood at 49%,” Lesetedi said, adding that this demonstrates that their diversification strategy is truly bearing fruits with life business as the largest contributor.

Net Premium Income of Botswana Life Insurance grew by 11% from P2.35 billion to P2.60 billion in 2019 and total new business written grew by impressive 18%. This, according to the Group, is underpinned by strong performance on group lines and is expected to grow further.

The Group has conceded that its results for 2020 will be affected COVID-19 pandemic, however noting that it is well capitalised with adequate resources to absorb some of the economic and market shocks as a rapid robust recovery plan has been set to address emerging business risks.

Lesetedi insisted that they are confident the processes they have put in place to absorb shocks will allay the imminent Covid-19 risks.

BIHL Group Chief Financial Officer, Kudakwashe Mukushi, said they posted Return on Group Equity Value (ROGEV) of 13% for fiscal year ended December 31 2019. This, he said, fell short of the target ROGEV of 14.5%, but was a significant improvement on the return reported at half year.

“The improved return mainly came from an increase in Value of in- force which grew up by P147 million compared to prior year. In addition, most of the underlying companies performed well, enabling them to contribute positively to the EV of the Group,” highlighted Mukushi.